S&P
Pre-close View… Hanging on for dear life.
Choppy ranging tries breaking higher.
Oversold RSIs at this morning’s 2239.50 low have yet to be retested. That’s an attraction below.
Several attacks to within 1-3 ticks have stopped optimistically short of neutralizing the low. That’s potentially bearish from a contrarian perspective.
Ranging choppily between two inflection points has chipped away at both 2240.25-2244.25. Finally a break higher has been attempted, but too late for it to be more than a false break. In fact, RSIs diverged negatively upon touching 2246.50. And its reaction down has already fallen 4 points.
A fresh high above 2246.50 would be credible for extending higher. Otherwise, the vulnerability is down, likely filling the gap to Friday’s 2236.50 close. Either a better bottom can form there, or else last week’s decline can resume.
Daily Spot…
A daily summary of high-profile members of several complexes… View a more detailed discussion of each chart at the end of today’s Market Wrap.
Eurodollar Mar Contract (EC, ETF: (FXE, UUP))
Friday’s break higher was weak confirmation to Thursday’s weak breakout attempt. But extending higher would have been credible. Or simply dipping to test recent “lower prior highs.” All of which is now much higher after Tuesday morning’s plunge back to recent lows. There was no bullish reason to fill the gap back down to 1.0435 that had been filled already. The gap fill held, so rallying sharply is the only bullish scenario now. Delaying a recovery is not strength.
Gold Feb Contract (GC, ETF: (GLD))
Tuesday morning’s surge attacked the 1167.00 target already to within $1. There is no requirement to extend any higher, and back under 1154.50 would signal momentum already reversing down.
Silver Mar Contract (SI, ETF: (SLV))
Bouncing sharply at Tuesday’s open helped to leverage Friday’s late bounce. The reaction down from testing 16.20 has avoided gaining traction. Closing above 16.20 signals a new rally leg underway, which already extended to a fresh high Tuesday.
30-year Treasury Mar Contract (US, ETF: (TLT))
Gapping down sharply to 149-04 was recovered to fill the gap back up to Friday’s test of 150-24, still targeting 151-12 if sellers are gaining traction for their efforts.
Crude Oil Feb Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Rallying sharply overnight neutralized all “unfinished business above,” stopping 6 cents short of the three-week old 56.24 Sunday night high. Not immediately, but soon, price tumbled sharply to 53.18 where the price had based previously. There’s no bullish reason to revisit it after already probing higher, but back above 54.20 would trigger a retest of Tuesday’s highs.
Natural Gas Feb Contract (NG, ETF: (UNG, UNL))
The reaction down from probing above 3.75 had retraced Thursday, and broken lower Friday. Its minimum 3.62.objective was met overnight, and then broken on the way to recent pullback lows around 3.30. That’s also a prior low, and any lower would target 3.18.
Mid-day Update… Stretched, but not snapping.
Morning reversal has settled into a range.
The reversal from 2259.50 ultimately touched this morning’s 2239.50 bias-up signal as support. That was back when the bias environment started lapsing at 11:30.
Its reaction up touched 2244.25 resistance, which reacted down to 2240.25 support. More than just support and resistance, these are buy and sell signals that would have extended 6 points if triggered. Neither was triggered, and the range persists.
Now the afternoon bias environment has triggered no-bias. The 2240.25-2244.25 signals remain intact. Delaying a recovery in this pattern tends instead to extend the decline. Probing either way would be credible for extending, but fresh lows is likelier.
Anyway, RSIs are oversold at this morning’s low. An attempt at neutralizing it stopped optimistically short by 1 tick from even touching it. The gap back down to Friday’s 2236.50 close can be filled, and if not held, then a deeper decline targeting 2215.00 can resume.
Look ahead: Economic Calendar – for Wed Jan 4, 2017
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Wednesday’s ADP is an opportunity to fine-tune expectations for Friday’s reaction to its pre-open Employment Situation report. It has a reliable track record for triggering a reaction, and for setting the tone of Wednesday’s other reaction. The afternoon’s FOMC Minutes will be watched closely for signs of future anticipated rate hikes.
MBA Mortgage Applications
7:00 AM ET
*ADP Employment Report
8:15 AM ET
Gallup U.S. Job Creation Index
8:30 AM ET
Redbook
8:55 AM ET
Gallup US Consumer Spending Measure
2:00 PM ET
*FOMC Minutes
2:00 PM ET
Afternoon Bias
| TUE afternoon signal (triggered at 1:20 ET) | SPX | ES |
| Bias-up: above | 2252.25 | 2246.75 |
| …would target | 2257.50 | 2252.00 |
| Bias-down: under | 2245.00 | 2239.50 |
| …would target | 2239.50 | 2234.00 |
| Signal status: NO-BIAS | FAQ | |
| INTRO VIDEOS #1 and #2 | ||
1. At 1:20, trading above the bias-up signal or under the bias-down signal would put into play a test of its bias-up or bias-down target.
2. Not triggering either bias signal at 1:20 would be “no-bias,” and the bias signals should define the bias environment’s range.
— A test of the opposite bias signal would be targeted if one bias signal was tested before triggering no-bias.
3. Touching the bias signal within 3 minutes either way of 1:20 would invoke a grace period through 1:30 to trigger a late signal.
— “Late” signals don’t require testing the opposite bias signal, but it’s still likely.
4. Still testing the bias signal at 1:30 after invoking the grace period would trigger “noN-bias,” with no bias influence.